contents 3 Corporate Information 4 Profile of Directors 6 Chief Executive Officer s Statement 8 Statement on Corporate Governance

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2 2008INSAS contents 3 Corporate Information 4 Profile of Directors 6 Chief Executive Officer s Statement 8 Statement on Corporate Governance 12 Statement on Internal Control 14 Audit Committee Report 16 Five Years Financial Highlights 17 Financial Statements 79 List of Properties 80 Analysis of Shares, ICULS and Warrants Holdings 84 Statement of Directors Interest in the Company and its Related Corporations 85 Notice of Annual General Meeting 87 Statement Accompanying Notice of Annual General Meeting 88 Statement in Relation to the Proposed Renewal of Authority to Purchase its Own Shares by the Company 91 Proposed Amendments to the Articles of Association of the Company Proxy Form 1

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4 INSAS Corporate Information 2008 BOARD OF DIRECTORS YAM Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah DK(II), SIMP Chairperson;Independent Non-Executive Director Dato Thong Kok Khee Executive Deputy Chairman Dato Wong Gian Kui Chief Executive Officer / Managing Director AUDIT COMMITTEE YAM Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah DK(II), SIMP Chairperson; Independent Non-Executive Director Michael Lim Hee Kiang Independent Non-Executive Director Dato Wong Gian Kui Chief Executive Officer/ Managing Director Dr Tan Seng Chuan Executive Director Dato Thong Kok Yoon Non-Executive Director Micheal Lim Hee Kiang Independent Non-Executive Director Melwani Ashok Bhagwandas Non-Executive Director Cheong Eng Tick Independent Non-Executive Director COMPANY SECRETARY Chow Yuet Kuen REGISTERED OFFICE No. 45-5, The Boulevard Mid Valley City Lingkaran Syed Putra Kuala Lumpur Tel : Fax : PRINCIPAL AUDITOR SJ Grant Thornton (AF 0737) (Member of Grant Thornton International) Chartered Accountants Level 11, Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur PRINCIPAL BANKERS Am Bank (M) Berhad Affin Bank Berhad Alliance Bank Malaysia Berhad CIMB Bank Berhad EON Bank Berhad Hong Leong Bank Berhad HSBC Bank Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad Public Bank Berhad RHB Bank Berhad Standard Chartered Bank Malaysia Berhad SOLICITORS R Thayalan Raslan Loong Shearn Delamore & Co Tee Bee Kim & Partners STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad SHARE REGISTRARS Megapolitan Management Services Sdn Bhd No. 45-5, The Boulevard Mid Valley City Lingkaran Syed Putra Kuala Lumpur Tel : Fax :

5 INSAS2008 Profile of Directors YAM TENGKU PUTERI SERI KEMALA PAHANG TENGKU HAJJAH AISHAH BTE SULTAN HAJI AHMAD SHAH, DK(II), SIMP Aged 51, is a Malaysian citizen and an Independent Non-Executive Director. She was appointed as the Chairperson of Insas on 12 November She has a Diploma in Business Administration from Dorset Institute, United Kingdom and has been a Director of TAS Industries Sdn Bhd since 15 August TAS Industries Sdn Bhd is an investment holding and property development company in Kuala Lumpur. She has no family relationship with any Director/major shareholder of Insas and has no conflict of interest with Insas. She has not been convicted for any offences within the past 10 years. DATO THONG KOK KHEE Aged 54, is a Malaysian citizen and was reappointed to the Board of Insas on 28 February 2007 and is currently the Executive Deputy Chairman. Dato Thong was an Executive Director and Chief Executive Officer of Insas from 10 March 1993 until 29 November A graduate from the London School of Economics, Dato Thong had worked in the financial services industry since He was an Executive Director of Standard Chartered Merchant Bank Asia in Singapore and Head of its corporate finance division. He is a substantial shareholder of Insas and a brother of Dato Thong Kok Yoon. He has no conflict of interest with Insas and has not been convicted for any offences within the past 10 years. DATO WONG GIAN KUI Aged 49, is a Malaysian citizen and an Executive Director. He was appointed to the Board of Insas on 11 September He was later appointed as Managing Director on 30 November 2000 and subsequently became the Chief Executive Officer / Managing Director on 29 November He is an accountant by profession and has been a member of the Malaysian Institute of Accountants since 1988 and of the Malaysian Institute of Certified Public Accountants since Prior to joining Insas, Dato Wong worked for Harun, Oh & Wong, a member of Horwath International firm of public accountants in Malaysia from 1981 to 1990 and Stoy Hayward London, Chartered Accountants from He has no family relationship with any Director/major shareholder of Insas and has no conflict of interest with Insas. He has not been convicted for any offences within the past 10 years. 4 DR TAN SENG CHUAN Aged 53, is a Malaysian citizen and an Executive Director. Dr Tan was appointed to the Board of Insas on 18 March He graduated with First Class Honours in Mechanical Engineering from Imperial College, England in Dr Tan obtained his Masters and Ph.D in Engineering Science in 1981 and 1983 respectively from Harvard University, USA. Dr Tan has very wide experience in the information technology (IT) industry. He has worked on leading edge software and hardware product development with many companies in the global IT industry. He has no family relationship with any Director/major shareholder of Insas and has no conflict of interest with Insas. He has not been convicted for any offences within the past 10 years.

6 INSAS 2008 DATO THONG KOK YOON Aged 57, is a Malaysian citizen and a Non-Executive Director. He was appointed to the Board of Insas on 16 November Dato Thong is presently the Managing Director of M & A Securities Sdn Bhd, a wholly-owned stock broking subsidiary of Insas. He graduated from the Imperial College of Science and Technology, University of London with a Bachelor of Science majoring in Mechanical Engineering in He is a substantial shareholder and a brother to Dato Thong Kok Khee. He has no conflict of interest with Insas and has not been convicted for any offences within the past 10 years. MR MELWANI ASHOK BHAGWANDAS Aged 50, is a Singaporean and a Non-Executive Director. He was appointed to the Board of Insas on 29 November He is a graduate from the National University of Singapore in Mr Ashok has very wide experience in marketing lifestyle products in both retail and restaurant operations, corporate planning and strategy and joint-venture start-up in regional markets. He is a substantial shareholder and a director of Melium, an associate company of Insas and he holds directorships in several private limited companies. He also sits on the Board of Sumida Corporation, a public company listed on the Tokyo Stock Exchange. He has no family relationship with any Director/major shareholder of Insas and has no conflict of interest with Insas. He has not been convicted for any offences within the past 10 years. MR CHEONG ENG TICK Aged 61, is a Malaysian citizen and an Independent Non-Executive Director. He was appointed to the Board of Insas on 29 November He holds a Bachelor of Law (Hons) degree from the National University of Singapore and was admitted as an advocate and solicitor to the Malaysian Bar in 1971 and to the Singapore Bar in In 1976, he was appointed as a Commissioner for Oaths in Malaysia. He spent 18 years in private legal practice in partnership with Messrs S.Y. Lee & Cheong in Ipoh and Messrs Joseph Tan & Tang, Kuala Lumpur from 1972 to 1990 before moving on to become a partner in Messrs Shook Lin & Bok, Kuala Lumpur. He was an Executive Director of Tongkah Holdings Bhd from 1991 to He has no family relationship with any Director/major shareholder of Insas and has no conflict of interest with Insas. He has not been convicted for any offences within the past 10 years. MR MICHAEL LIM HEE KIANG Aged 60, is a Malaysian citizen and an Independent Non-Executive Director. He was appointed to the Board of Insas on 31 July He holds a LLB and LLM from the Victoria University of Wellington, New Zealand. He is also currently a senior partner of Messrs Shearn Delamore & Co., one of the largest legal firm in Malaysia. Mr Lim also sits on the board of several public companies, among others, Dijaya Corporation Bhd, Selangor Properties Berhad, DKSH Holdings (Malaysia) Berhad, Major Team Holdings Berhad, Paragon Union Berhad and Wawasan TKH Berhad. He has no family relationship with any Director/major shareholder of Insas and has no conflict of interest with Insas. He has not been convicted for any offences within the past 10 years. 5

7 INSAS2008 Chief Executive Officer s Statement On behalf of the Board of Directors, I am pleased to present the Annual Report and audited financial statements of Insas Berhad for the financial year ended 30 June Financial Review The recorded a lower profit before tax of RM23.1 million for the financial year ended 30 June 2008, as compared to RM77.3 million achieved in the previous year. The decline in pre-tax profit is primarily attributable to the unprecedented global financial crisis, the weak stock market conditions as well as domestic political uncertainties which The continues to maintain a substantial long term investment in IGB Corporation Berhad, a leading listed property developer which owns the iconic Mid Valley Megamall, The Gardens and the related developments in Kuala Lumpur. The investment generates stable dividend income and offers good potential for future capital appreciation. have adversely affected the financial performance of our stock broking, investment trading and retail divisions. The s shareholders funds stood at RM727 million as at 30 June 2008, and the net tangible asset per share increased from RM1.02 to RM1.04. The technology division recorded a higher operating revenue of RM126 million as compared to RM46 million in the previous year. Pre-tax profit increased by 146% from RM5.6 million to RM13.8 million in the current financial year. The increase in operating revenue and pre-tax profit is mainly Review of Operations attributable to Inari Technology Sdn Bhd, a 51% owned subsidiary based in Penang which is primarily engaged in 6 Our core businesses comprise of stock broking, long term investment holding in a public listed company, technology, property investment and development, project and credit financing, hospital investment, car rental, high fashion retail and food and beverage. The stock broking division, M&A Securities Sdn Bhd reported a pre-tax loss of RM1.4 million as compared to pre-tax profit of RM16.5 million in the preceding year. The results of the stock broking unit have been affected by lower brokerage income and provision for bad and doubtful debts on the back of the weak stock market sentiment and turmoil in the world s financial markets during the year under review. electronic manufacturing and assembly of wireless microwave telecommunication products. Barring unforeseen circumstances, we expect the technology division to contribute positively towards the s revenue and profit in the coming years. Development works at our 2 maiden projects at Putra Residen, Bukit Rahman Putra comprising 57 units zero boundary bungalows and Ampang Putra Residency at Jalan Ampang Putra comprising 18 units of 3 storey shop offices and 2 blocks of 20 storey apartments have progressed well during the financial year. The stage of construction has reached 60% for Putra Residen, 60% for the shop offices and

8 INSAS % for the apartment block at Ampang Putra Residency project. The property division reported gross sale revenue of RM29.3 million and pre-tax profit of RM2.2 million for the year ended 30 June economic activities in Malaysia. Against this uncertain economic backdrop, the will adopt a more prudent approach in evaluating and managing the risks associated with ongoing and future projects and investment opportunities, as well as containing costs, with the primary The performance of our 43.3% fashion retail associate, Melium Holdings Sdn Bhd has been affected by one-off start aim to create long-term growth, generate sustainable cash flows and profitability for our shareholders. up costs incurred for the opening of new Melium and F&B outlets at The Pavillion and The Gardens, the increase in Appreciation rental and operational costs as well as lower consumer spending caused by the worsening global economic crisis. Arising therefrom, Melium contributed a lower profit of RM0.2 million to the, as compared to RM4.5 million in the corresponding period. On behalf of the Board of Directors, I wish to extend my heartfelt thanks to all our management and staff for their loyalty, dedication and commitment in carrying out their duties and their contribution to the continued success over the past year. On 1 July 2008, the Company had entered into a Share Purchase Agreement for the sale of our entire 20% equity interest in Gleneagles Hospital (Kuala Lumpur) Sdn Bhd, one of the leading tertiary hospital in Kuala Lumpur, to Pantai Irama Ventures Sdn Bhd for a total cash consideration of I would also like to record my deepest appreciation to our business associates, bankers, customers, shareholders and the government authorities for their continued support, cooperation and trust extended to the. RM68.65 million. As at the date hereof, I am pleased to inform that all conditions precedent and authority approvals have been satisfied and the Share Purchase Agreement is now unconditional. The Board expects the sale of our interest in Lastly, to my fellow Board members, I wish to extend my sincere thank you for your invaluable counsel and support during the year. Gleneagles to be completed soon and the is expected to realise an exceptional gain of RM55 million for the financial year ending 30 June Prospects Most business corporations face serious challenges in the year ahead. The external environment, undermined by the unprecedented global credit crisis, spiraling commodity prices and inflationary pressures, will continue to weigh down on Dato Wong Gian Kui CEO / Managing Director 7

9 INSAS2008 Statement on Corporate Governance 8 INTRODUCTION Corporate governance set out the framework and process which corporations, through their Board of Directors and senior management, regulate their businesses activities. These principles aims to balance sound business operations with compliance to relevant laws, guidelines and regulations. The Board of Directors ( the Board ) of Insas Berhad is fully committed to maintaining the highest standards of corporate governance throughout the. To this end, it has adopted a set of Corporate Governance guidelines to govern its conduct within the spirit of the Malaysian Code of Corporate Governance and the Listing Requirements of the Bursa Malaysia Securities Berhad. The Board believes that high standards of corporate governance is the key to building an organistion of high integrity and corporate accountability with the ultimate objective of enhancing long-term shareholders value and returns to its stakeholders. The Board is pleased to set out below the manner in which it has applied the principles of corporate governance and the extent of compliance with the best practices set out in the Malaysian Code on Corporate Governance (the Code ) throughout the financial year and where there are deviations, the alternative measures undertaken pursuant to the Listing Requirements of Bursa Malaysia Securities Berhad. BOARD OF DIRECTORS a) Principal Responsibilities The Board has overall stewardship responsibility for supervising the s affairs within a framework of acceptable risks and in compliance with the relevant laws, guidelines and regulations. The Board concentrates principally on strategy, financial performance, critical and material business issues and specific areas such as management of risks, the s internal control system, succession planning for senior management and investors and shareholders communication policies. The Board is also accountable for the corporate governance, setting strategic direction of the and overseeing the investments and businesses of the. b) Composition The realised the establishment of an active, dynamic and independent Board is paramount in improving corporate governance practices. The current Board composition provides an effective combination of industry and professional experience, skills and expertise for the direction of the existing businesses and new corporate ventures undertaken by the. The Board is made up of an appropriate balance of Executives and Non-Executive Directors with diverse experience required for the effective stewardship of the and independence in decision making at Board level. The Board comprises eight members, namely the Chief Executive Officer, the Executive Deputy Chairman, an Executive Director, two Non-Executive Directors and three Independent Non-Executive Directors including the Chairperson. The current Board composition complies with the revamped Listing Requirements of the Bursa Malaysia Securities Berhad which requires a minimum of two directors or one third of the Board to be independent members. A brief profile of each of the directors is presented on Page 4 and 5 of the Annual Report. The Chief Executive Officer is responsible to the Board for the management and performance of the s businesses within the framework of the s policies, reserved powers and routine reporting requirements. There is a clear division of responsibilities on the differing roles of the Chairperson and the Executive Directors to ensure a balance of authority and power. The Chairperson heads the Board and is responsible for ensuring the Board meets regularly and ensure its effectiveness and standards of conduct. She has authority over the general agenda for each Board meeting to ensure that all Directors are provided with relevant information on a timely basis. The general agenda may include minutes of prior meetings of the Board, review of the s period financial reports, proposal papers from the management, matters requiring the Board s deliberation and approval and other reports. The Executive Directors take on primary responsibility for managing the s businesses and resources. They have overall responsibility for the operational activities of the and implementation of the Board s strategies, policies and decisions. The Board recognises the importance and contribution of its Independent Non-Executive Directors. The Independent Non-Executive Directors provide independent assessment and judgment on corporate proposals undertaken by the. They fulfill a pivotal role in bringing corporate accountability and independent, unbiased judgment and advice to bear on the Board s deliberation and decisionmaking. The role of Independent Non-Executive Directors is particularly important in ensuring that the strategies proposed by the Executive Directors and management team are discussed and examined fully and to take into account long-term interest of all parties affected by the s business activities. The Independent Non- Executive Directors are independent of the management and the major shareholders. c) Board Meetings The Board has five scheduled meetings annually, with additional meetings held as and when urgent issues and important matters arise that are required to be taken between the scheduled meetings. There were five Board meetings held during the financial year ended 30 June All Board meetings were held at The Boardroom, No. 45-3, The Boulevard, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur. The date and time of the Board meetings were as follows :- Date of Meetings Time 29 August p.m. 9 October noon 28 November noon 28 February noon 28 May noon

10 INSAS 2008 Details of attendance of Directors at the Board meetings are as follows :- Directors Attendance and number of meetings held during the financial year YAM Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah, DK(II), SIMP 4/5 Dato Wong Gian Kui 5/5 Dr Tan Seng Chuan 5/5 Dato Thong Kok Yoon 4/5 Melwani Ashok Bhagwandas 4/5 Cheong Eng Tick 4/5 Michael Lim Hee Kiang 4/5 Dato Thong Kok Khee 5/5 d) Supply of Information The Board has full and timely access to information concerning the. An agenda and board reports containing information relevant to the business for consideration at the meeting are circulated prior to the Board meetings to enable the Directors to obtain information and explanation to enable them to discharge their duties and responsibilities competently and in a wellinformed manner. Senior management and key operation managers are informed of the guidelines on the preparation of board papers, in particular on its contents and format, to ensure a systematic and comprehensive presentation of information at all times. The board papers and reports provide updates of periodical information on the s financial performance, operational matters and corporate developments. Board proceedings, deliberations and conclusions of the Board at every Board meeting are duly recorded in the Board minutes and all minutes are signed by the Chairperson of the meeting in compliance with Section 156 of the Companies Act, All Directors have the right and duty to make further enquiries whenever they consider it necessary. The Board has access to the advice and services of the Company Secretary and senior management employees of the who are responsible to the Board for ensuring that all Board procedures are followed and that applicable laws and regulations are complied with. The Board may also obtain independent professional advice at the Company s expense in furtherance of their duties. The Board is also regularly updated and advised by the Company Secretary of any corporate announcement released to Bursa Malaysia Securities Berhad, impending restriction in dealing with the securities of the Company prior to the announcement of financial results and corporate proposals and new regulations, guidelines or directives issued by the Bursa Malaysia Securities Berhad, Securities Commission and other relevant regulatory authorities. e) Appointment and Re-election There is no Nomination Committee in the but the Board has the service of the Company Secretary to ensure that the appointments of new directors to the Board are properly made with an established and transparent procedure and in compliance with the rules of the relevant authorities. Any appointment of additional director is made as and when it is deemed necessary by the existing Board with due consideration given to the mix and range of expertise and experience required for an effective Board. In accordance with the Company s Articles of Association, all Directors who are appointed by the Board are subject to re-election by the shareholders at the following Annual General Meeting after their appointment. The Articles also provide that the Directors are subject to re-election by rotation at least once in every three years. Reappointments are not automatic and the Directors who retire are to submit themselves for re-election by shareholders at the Company s annual general meeting. Details of directors seeking re-election at the forthcoming annual general meeting are disclosed in the Statement Accompanying Notice of Annual General Meeting. f) Training and Continuing Board Development All the Directors have attended and completed the Mandatory Accreditation Programme (MAP) in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad. With the amendment to the Practice Note 15/2003, the Directors are now responsible to determine the appropriate training that will meet their respective needs in view of the changing laws, regulations and business environment. The Directors are encouraged to attend continuing education programmes and seminars to keep abreast with current developments in the industry as well to further their knowledge and keep themselves updated on the relevant regulatory and corporate governance developments in order for them to discharge their duties as directors in an effective and efficient manner. g) Remuneration The remuneration of the Directors of the Company are linked to performance, service seniority, experience and scope of responsibilities and industry market rate so as to ensure that the attracts, motivates and retains Directors with the necessary skills and experience needed to run the effectively. In line with this, remuneration for the Executive Directors is aligned to individual and corporate performance. For Non-Executive Directors, the level of remuneration would commensurate with the level of experience and responsibility undertaken by them. The remuneration of Executive Directors comprises fees, salary and allowances and other customary benefits made available by the. The remuneration of Non-Executive Directors comprises fees, allowances and other customary benefits. The aggregate annual Directors fees for the Non-Executive Directors as recommended by the Board are to be approved by shareholders at the Annual General Meeting. 9

11 INSAS2008 The details of the remuneration of Directors of the Company for the financial year categorised into appropriate components are as follows : Fees Salaries & other Benefits Total emoluments in kind RM RM RM RM Executive Directors 35,982* 2,260,897** 84,022 2,380,901 Non- Executive Directors 96,000 40,320 16, ,320 * The fees received by the Executive Directors of the Company refer to fees accrued for by a subsidiary company of the during the financial year. ** This includes the aggregate remuneration of an Executive Director of a subsidiary company who is a Non-Executive Director of the Company. The remuneration of the Directors are further analysed by applicable bands of RM50,000 which comply with the disclosure requirements under the Listing Requirements of the Bursa Malaysia Securities Berhad. The Board is of the view that the transparency and accountability aspect of corporate governance which is applicable to Directors Remuneration are appropriately served by the band disclosure. The aggregate remuneration of Directors analysed into the appropriate bands are as follows : Range of remuneration Executive Non-Executive Below RM50,000 3 RM50,001 to RM100,000 1 RM300,001 to RM350,000 1 RM500,001 to RM550,000 1 RM650,001 to RM700,000 1 RM800,001 to RM850,000 1 INVESTOR RELATIONS AND COMMUNICATION WITH SHAREHOLDERS Shareholders are presented a review of financial performance for the year at each Annual General Meeting. The Company s Annual General Meeting has always been well attended and is the principal forum for dialogue and interaction with shareholders. It has always been the practice for the Chairperson to invite shareholders to raise any questions that they may have in relation to the s activities, financial performance and prospects and the shareholders comments and suggestions noted by the Board for consideration. Key investor relation activities such as dialogues with financial and research analysts and investors are held to provide constructive communications on matters concerning the. The Company s website at provides an easy and convenient avenue for shareholders and investors to gain access to the s corporate information and news and events. BOARD COMMITTEE To ensure the effective discharge of its fiduciary duties, the Board has delegated specific responsibilities to the Audit Committee, which operates within clearly defined terms of reference. The Audit Committee members are thus able to deliberate in greater detail and examine the issues within their terms of reference in compliance with the Code. The Audit Committee has been established to assist the Board in execution of its responsibilities. The Audit Committee meets periodically to carry out its functions and duties pursuant to its terms of reference. Other Board members are also invited to attend the meetings when the needs arise. The Audit Committee meets with the external auditors at least once a year. The details of the composition, terms of reference and the activities of the Audit Committee are set out in the Audit Committee Report. ACCOUNTABILITY AND AUDIT 10 The Board recognises the importance of maintaining effective communication with shareholders, stakeholders and the public on all material business matters affecting the Company and the. In addition to the announcements on the quarterly results and other corporate news, press releases and announcements for public dissemination are made periodically to capture any significant corporate event or product launch that would be of interest to investors and members of the public. The Board places emphasis on timely and equitable dissemination of information to shareholders and investors to keep them informed of the s performance, corporate strategy and major developments. Announcements to the Bursa Malaysia Securities Berhad on corporate proposals, quarterly results and annual report and other public announcements, are accessible to shareholders through Bursa Malaysia s website at a) Statement of Board of Directors Responsibility for Preparing the Financial Statements The Board is collectively responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the and Company as at 30 June 2008 and of the results and cash flows of the and Company for the financial year ended on that date. The Director are pleased to announce that in preparing the financial statements for the financial year ended 30 June 2008, the has: ensured compliance with applicable Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia; adopted and consistently applied appropriate accounting policies; and made judgments and estimates that are prudent and reasonable.

12 2008INSAS The Directors are also responsible for ensuring that the and Company keep proper accounting records. In addition, the Directors have overall responsibilities for proper safeguarding of the assets of the and Company and taking such reasonable steps for the prevention and detection of fraud and other irregularities. b) Variation in Results There is a deviation of 10% between the profit after taxation and minority interest in the announced unaudited consolidated income statement and the audited consolidated income statement for the financial year ended 30 June b) Financial Reporting The Board has taken reasonable steps to provide a balanced and understandable assessment of the s financial performance and prospects, primarily through the annual report and quarterly financial statements. The Board has also empowered the Audit Committee to review the s financial reports to ensure conformity with applicable Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia before the financial statements are recommended to the Board for consideration and approval for release to public. The reconciliation between the profit after taxation and minority interest stated in the announced unaudited consolidated income statement and the audited consolidated income statement are stated below :- Note RM 000 RM 000 Unaudited profit after taxation and minority 15,060 interest for the year ended 30 June 2008 as announced on 27 August 2008 c) Internal Control The Board recognises the importance of maintaining a sound system of internal controls to safeguard the shareholders investment and the s assets. The information on the s internal control is set out in the Statement on Internal Control on Page 12 and 13 of the Annual Report. d) Relationship with the Auditors Through the Audit Committee, the has established a transparent and formal relationship with the Company s external auditors in seeking professional advice and ensuring compliance with applicable financial reporting standards and statutory requirements. The s external auditors report to the Audit Committee on any weaknesses in the s internal control system, any non-compliance of financial reporting standards and communication of fraud that have come to their attention in the course of their audit. The s external auditors also fulfill an essential role to the shareholders of the Company and other users of the financial statements by enhancing the reliability of the financial statements. e) Audit Fees The total of the statutory and non-statutory audit fees (excluding expenses and service taxes) charged by the auditors for the financial year ended 30 June 2008 amounted to RM266,600 (2007 : RM199,600). f) Non Audit Fees The total of the non-audit fees (excluding expenses and service taxes) charged for the financial year ended 30 June 2008 by the auditors for services performed for the amounted to RM121,500 (2007 : RM135,000). OTHER INFORMATION a) Share Buybacks During the financial year, the Company bought back a total of 1,941,100 of its issued shares from the open market. The details of the cumulative shares bought back are set out in Note 25 of the audited financial statements on Page 56 of the Annual Report. Add (increase in profit) : Taxation and deferred taxation Unrealised forex gain Minority interest share of profit Cost of sale ,506 Audited profit after taxation and minority interest for the year ended 30 June ,566 Notes: 1. Increase in provision for taxation of RM24,000 and decrease in provision for deferred taxation of RM306,000, adjusted for during the course of audit. 2. Increase in unrealised forex gain recognised in the audited results. 3. Over allocation of profit after taxation to minority interest of a subsidiary company in the unaudited results. 4. Over recognition of cost of sale of a subsidiary company in the property development business, adjusted for during the course of audit. c) Share Options, Warrants and Irredeemable Convertible Unsecured Loan Stocks ( ICULS ) There were no share options, warrants or ICULS exercised and/or converted into ordinary shares during the financial year. d) Profit Guarantee There was no profit guarantee given by the Company during the financial year. e) Material Contract There were no material contracts involving Directors and substantial shareholders for the financial year. f) Corporate Social Responsibility During the financial year, no activities were conducted by the in relation to Corporate Social Responsibility. COMMITMENT The Board will continuously review its principles and practices in corporate governance in its efforts to achieve the highest standards of corporate governance throughout the. This Statement is made in accordance with the resolution of the Board of Directors dated 17 October

13 INSAS2008 Statement on Internal Control INTRODUCTION This Statement is made pursuant to the Bursa Malaysia Securities Berhad Listing Requirements Paragraph 15.27(b) which requires the Board of Directors of public listed companies to make a statement about the state of internal control of the listed entity as a in the Annual Report. The Board of Directors of Insas Berhad ( the Board ) is committed to maintain a sound system of internal controls and risk management practices to safeguard shareholders investment and the s assets. The Board is pleased to provide the Statement of Internal Control which outlines the key elements of the internal control system within the during the financial year. 12 ACKNOWLEDGEMENT OF RESPONSIBILITY FOR RISK AND INTERNAL CONTROLS The Board affirms its overall responsibility for the s system of internal controls which includes the establishment of appropriate control environment as well as review the adequacy and integrity of the s internal controls, risk management practices and management information systems. In view of the inherent limitations in any system of internal controls, the system is designed to manage rather than eliminate the risk of failure to achieve its corporate objectives. Accordingly, it can only provide reasonable but not absolute assurance against material errors, misstatement, financial losses or fraud. The system of internal controls includes inter alia, financial, operational, information technology, organisation, compliance and risk management controls. Also, the s system of internal controls involves all management and employees of the from each business unit. The Board is responsible for determining key strategies and policies for significant risks and controls issues, whilst functional key employees and the management team of subsidiary companies and operating units are responsible to implement the Board s policies effectively by designing, executing, monitoring and managing the internal control processes. The Board confirms that there is an ongoing process, for identifying, evaluating and managing the significant risks faced by the throughout the financial year, which is regularly reviewed by the Board through its Audit Committee, which dedicates separate time for discussion of this matter. RISK MANAGEMENT The has an ongoing risk management process for identifying, evaluating, managing and reviewing significant risks faced by the businesses in the. The risk management process involves all business and functional units of the in identifying the significant risks affecting the achievement of business objectives and the effectiveness of controls in place to manage them. The Board recognises that risk management is an integral part of the system of internal control and good management practice that is critical to the s continued profitability and for enhancement of shareholders value. The significant business risks faced by the respective business units and key issues pertaining to operational and external environment are reviewed by the management team of each business unit. The responsibility of managing these risks lies with the respective heads of units. Key risks relating to the business units operations are addressed at periodic management meetings. The Board undertakes ongoing reviews of key commercial and financial risks facing the s main businesses together with more general risks such as those relating to compliance with law and regulations. The has an on-going credit risk management process undertaken by the respective units management team to identify, assess and evaluate principal credit risks and to ensure that appropriate risk treatments are in place to mitigate these risks affecting the achievement of the s objectives. Management reports the monitoring of the risks to the Executive Deputy Chairman and the Chief Executive Officer, whose main roles are to assess, on behalf of the Board of Directors, the key risk inherent in the business and the system of controls that are in place to manage these risks. Changes in the business, operations and the external environment that result in significant risks will be reported to the Audit Committee and the Board accordingly. KEY ELEMENTS OF THE GROUP S INTERNAL CONTROLS SYSTEMS The framework of the s internal control systems and the key procedures include:- Management and direction of the s businesses The Executive Deputy Chairman and the Chief Executive Officer ( CEO )/ Managing Director ( MD ) are empowered to manage the businesses of the and is accountable for the conduct and performance of the s businesses within agreed business strategies. The CEO/ MD implements the Board s expectations of the system of internal controls. Investment and capex appraisals The CEO/ MD and the senior management team review material investments and the performance of significant projects undertaken by the and make appropriate recommendations and evaluations to be brought to the Board s attention. Proposals for substantial and major capital expenditure of the are reviewed and approved by the Board. Financial and operational review and reporting The CEO/ MD and the senior management team review and report on significant operational, financial, risk management and legal issues of key operating subsidiaries and ensure that remedial actions are taken by the management of the subsidiaries concerned to address deficiencies that arise. The CEO/ MD and the senior management team attend management and operational meetings to review financial and operations reports and to monitor the performance and profitability of the s businesses. Any deviation in corporate strategy and business objectives are deliberated and necessary action will be instituted. The CEO/ MD practices an open door policy whereby matters arising are promptly highlighted and immediately dealt with. Scheduled Board meetings The Board meets at least quarterly and at other scheduled intervals when necessary to maintain full and effective supervision of the s activities and operations. The CEO/ MD will lead the presentation of board papers and provide comprehensive explanations of pertinent issues and the Board will go through thorough deliberation and discussion before arriving at any decision which has a bearing on the.

14 2008INSAS The Board reviews the financial and operating information and key performance indicators of strategic business units and legal and regulatory matters on a quarterly basis. Audit Committee The Board has the assistance of the Audit Committee whose principal duty is to review and monitor the effectiveness of the s system of internal control. The Audit Committee meets with the s principal external auditors to review the audit findings arising from the statutory audit of the financial statements and their tests on the system of internal control. Organisational Structure The has an organisational structure which clearly defines the responsibilities and the appropriate level of empowerment at various authorisation levels. This is to facilitate quality and timely decision-making process at the appropriate level in the organisation hierarchy. Centralised support functions The also has in place key support functions, which are managed centrally at its Corporate Office. These comprise Secretarial and Share Registration, Legal, Human Resource, Finance, Treasury and Tax compliance functions. These support functions ensure consistency and compliance in the setting and application of policies and procedures relating to these functions thus reducing duplication of efforts and thereby providing synergy to the. Defined accountability and authorisation levels The senior staff and management team of key subsidiary companies are responsible for:- - conduct and performance of their respective business units; - identification and evaluation of significant risks applicable to their respective businesses together with the design and institution of suitable internal controls; - meeting defined reporting deadlines and ensuring compliance with policies, procedure and regulatory requirements; Budgeting Process Detailed budgeting process whereby key operating subsidiaries prepare budgets for the coming year, which are approved at the operating level. Key performance indicators are set for each of these operating subsidiaries and the performance are monitored via reporting system which highlights significant variances against budgets for investigation and follow-up by the management of the respective operating subsidiaries. Specific credit risk management The Board, through the relevant management team, adopted a prudent approach with regard to the management of credit risks. Procedures on credit application, review and approval of high value loans by the subsidiary company in the money lending business are undertaken by designated senior management to ensure credit risk is contained and the loans are properly and adequately securitised. Procedures for recovery for loans exceeding their credit limit are also in place. Human resource management The Board considers the integrity of employees at all levels to be of utmost importance, and this is pursued through its comprehensive and structured recruitment, appraisal and reward program. The also has ongoing training and development programs to ensure the attracts, motivates and retains competent and skilled employees. Corporate values and code of conduct, which emphasise on the importance of key values such as loyalty, integrity, professionalism and cohesiveness are communicated to all employees and are set out in the s Employee Handbook. Annual statutory audit The external auditors provide assurance in the form of their annual statutory audit of the financial statements of the. Areas for improvement identified during the course of the statutory audit by the external auditors are brought to the attention of the Audit Committee through management letters or are deliberated at the Audit Committee meetings. The Board does not regularly review the system of internal control of its associate companies as the Board does not have any direct control over their operations. Notwithstanding this, the s interest is served through representation on the boards of the respective associate companies and receipt and review of monthly management accounts and inquiry thereon. Where practical, the would request for functional, operating and other financial information prepared in accordance with reporting standards that are acceptable to the in assessing the performance of these entities with the objective of safeguarding the investment of the. Internal Audit Function The Board recognised that an internal audit function is necessary to provide independent assessment on the s internal control system and in the assessment of potential risks exposures in key business processes and in controlling the proper conduct of businesses within the. The Company, as a listed entity, is required under the new provisions of Paragraph of the Listing Requirements of Bursa Malaysia Securities Berhad to establish an internal audit function which is independent of the management and operations. The timeframe for compliance to set up the internal audit function by the listed entity is by 31 January The Company has not complied with Paragraph of the Listing Requirements and will comply before 31 January The internal audit function of the stock broking subsidiary reviews and assesses the adequacy, efficiency and effectiveness of the internal control with regards to the operation, financial, organisation and compliance requirements of the stock broking business. The internal audit function of the stock broking subsidiary reviews the internal controls in selected key activities of the stock broking business on the basis of an annual internal audit plan which was prepared and presented to the Audit Committee of the stock broking subsidiary for approval before implementation. Any major weaknesses in the system of internal controls are identified and brought to the attention of the Board of the stock broking subsidiary, the Audit Committee and ultimately the Board of the Company to ensure prompt corrective actions has been taken. Effectiveness of Internal Control The Board reviews the effectiveness of the system of internal control of the at periodic Board meetings and the effectiveness of the s system of internal controls will continue to be reviewed, enhanced and updated in line with the changes in the operating environment. The Board is of the view that the current system of internal controls that have been put in place throughout the is sufficient to safeguard the s assets and prevent any material loss to the. The Board is pleased to report that there were no significant internal control deficiencies or weaknesses that resulted in material losses or contingencies to the during the financial year that would require disclosure in the Annual Report. This Statement is made in accordance with the resolution of the Board of Directors passed on 17 October 2008 and has been reviewed by the external auditors as required under Para of the Bursa Malaysia Securities Berhad s Listing Requirements. 13

15 INSAS2008 Audit Committee Report 14 The Audit Committee comprises three members of whom two are independent non-executive directors. The members of the Audit Committee during the financial year ended 30 June 2008 are as follows: YAM Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah, DK(II), SIMP Chairperson / Independent Non-Executive Director Michael Lim Hee Kiang Independent Non-Executive Director Dato Wong Gian Kui Chief Executive Officer/ Managing Director TERMS OF REFERENCE Purpose The purpose of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities for the financial reporting process, system of internal control, audit process, and the s process for monitoring compliance with laws and regulations and the code of conduct, in particular, to :- ensure transparency, integrity and accountability of the s activities so as to safeguard the rights and interests of the shareholders; assist the Board in discharging its fiduciary duties and responsibilities in relation to management of principal risks, internal controls and compliance of statutory, legal and regulatory requirements; evaluates and monitors the financial reporting process, and provide assurance that the financial information provided by management is relevant, reliable and timely; ensure the adequacy and integrity of the s system of internal controls in carrying out the s operations; maintain regular scheduled meetings between the Board, the senior management, the internal and external auditors which acts as a forum for communication between these parties; ensure the independence of the Company s external auditors and its ability to conduct its audit without any restriction; review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; undertake any other duties as may be appropriate and necessary to assist the Board. Composition The Audit Committee shall be appointed by the Board from amongst their number and shall consist of no fewer than three (3) members. The members of the Audit Committee shall elect a Chairman from among their number, who shall be a Non-Executive Independent Director. An alternate director cannot be appointed as a member of the Audit Committee. In the event of a vacancy in the Audit Committee, the Board shall appoint a new member within three (3) months to fill up the vacancy. At least one member of the Audit Committee must be :- a member of the Malaysian Institute of Accountants ( MIA ) ; or a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967 in compliance of paragraph 15.10(1)(c) of the Listing Requirements of the Bursa Malaysia Securities Berhad; or must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967 Pursuant to the amendments to Paragraph of the Listing Requirements, the Company, as a listed entity, has to fulfill the requirement for the Audit Committee to comprise all non-executive directors, with a majority of them being independent. The timeframe for this compliance is by 31 January The Company has not complied with the amended Paragraph of the Listing Requirements and will do so before 31 January The Company will ensure the composition of the Audit Committee shall comply with other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad from time to time. Authority The Audit Committee is empowered by the Board to : investigate any matters within its terms of reference; have full and unrestricted access to all information and documents in relation to the ; have direct communication channels with the external auditors, internal auditors and to all employees of the ; have the resources which are required to perform its duties ; obtain external, legal or other independent professional advice and secure the attendance of external parties with relevant experience and expertise, at the s expenses if it considers necessary; have the right to convene meetings with the external auditors, the internal auditors or both excluding the attendance of other directors and employees of the and may extend invitation to other non-member directors and employees of the to attend to a specific meeting, whenever it considers necessary. Meetings and Attendance The Audit Committee shall meet at least 5 times a year or at a frequency to be decided by the Audit Committee. It shall convene meetings with external auditors, internal auditors or both, excluding the attendance of other directors and employees of the, whenever deemed necessary. The Audit Committee may invite other Directors and employees to be present to assist in resolving and clarifying matters raised. The General Manager Finance and certain senior members of the finance division shall normally attend the meetings. At least once a year the Audit Committee shall meet with the external auditors. The Chairman may also convene a meeting of the Audit Committee if requested to do so by any member, the management or the external auditors to consider any matters within the scope of its duties and responsibilities. The quorum for each meeting shall be at least 2 members. To ensure critical issues are highlighted to all the Board members in a timely manner, where possible, the Audit Committee meetings are convened before the Board meetings. The issues raised at the Audit Committee meetings will be further deliberated at Board level if necessary. Minutes of the Audit Committee will be circulated to the Board at the next scheduled meeting. Five (5) Audit Committee Meetings were held during the year under review as follows:-. Date of Meetings Time 29 August p.m. 9 October a.m. 28 November a.m. 28 February a.m. 28 May a.m.